US manufacturing contracts in September on orders pullback
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The news: US manufacturing contracted for a seventh consecutive month in September, as a pullback in orders suggests factory activity is losing traction.
The numbers: The Institute for Supply Management’s (ISM) manufacturing index edged up 0.4 points to 49.1. Readings below 50 indicate contraction.
The data released on Wednesday also saw the group’s orders index slide 2.5 points to 48.9 in September, falling back into contraction after expanding a month earlier for the first time since January.
While the ISM’s employment index shrank by less in September than the month prior it remained depressed at 45.3% for its eighth consecutive month of contraction. Layoffs and not filling open positions remain the main head-count management strategies, the ISM said.
The context: Eleven industries reported a contraction in September factory activity, led by wood products, apparel, plastics and rubber, and paper, while five industries expanded. The survey also showed manufacturers’ inventories shrank by the most in four months, indicating that producers were able to partly fill the uptick in August orders with existing stockpiles.
Private reports including the ISM survey and the ADP jobs report released earlier on Wednesday will be relied on heavily in the coming weeks, as the US government shutdown means economists and policymakers won’t have the usual official data for insights into the economy.
The source: Institute for Supply Management
